What If the Property Is Damaged Before Settlement? Your Rights and Remedies

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Who Bears the Risk Between Sale and Settlement?

In Victoria, the vendor retains the risk of loss or damage to the property until settlement is completed—unless the contract says otherwise.

This principle is confirmed under both:

  • The standard LIV contract of sale

  • Section 34 of the Sale of Land Act 1962 (Vic)

This means the seller is responsible for insuring the property and must deliver it in the same condition as inspected—fair wear and tear excepted.

What Types of Damage Are Common?

At Victorian Property Settlements, we have assisted clients dealing with:

  • Severe storm or hail damage to roofing and external structures

  • Vandalism during vacancy between sale and settlement

  • Burst water pipes or internal flooding

  • Theft of fixtures or appliances

  • Fires or electrical faults

In many cases, purchasers don’t discover the damage until the final inspection, typically 1–3 days before settlement.

Final Inspection Rights Under Victorian Law

Buyers are entitled to a final inspection within 7 days of settlement, under General Condition 16 of the standard contract.

This allows the purchaser to:

  • Confirm the property is in the same condition as when sold

  • Identify any post-sale damage or removal of included items

  • Raise concerns before completing the settlement

If damage is found, do not settle without immediate legal or conveyancing advice.

What Are the Remedies if Damage Is Discovered?

Depending on the nature of the damage, a purchaser may:

  • Demand repairs or compensation before or at settlement

  • Refuse to settle if the property is no longer in substantially the same condition

  • Negotiate a price reduction or retention amount in trust

  • Delay settlement until issues are resolved

If no agreement is reached, the contract may be rescinded under common law principles or consumer law protections.

Insurance Coverage and Risk

While the vendor is responsible for insurance, we advise all purchasers to also take out own risk cover from the date of contract. This double-layered protection helps:

  • Cover items like buyer’s liability for pre-settlement access

  • Provide faster recovery options in case of dispute

David Dawn’s Professional Insight

“Purchasers often feel powerless when damage is discovered late—but you’re not. You have the right to receive the property in the same condition it was sold. We make sure that happens.”

At Victorian Property Settlements, we:

  • Assist with formal inspection reports

  • Negotiate and document remedies

  • Liaise with insurers, agents, and vendors promptly

  • Prevent rushed or risky settlements

Final Word

Don’t assume everything will be fine between sale and settlement. Damage can happen. The law protects buyers—but only if you act promptly and through the proper channels.

Need Help Resolving a Pre-Settlement Dispute?

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
📍 Based in Frankston, serving all of Victoria
📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au